What does WhatsApp's new business API mean for data privacy?

WhatsApp has launched its brand new, invitation-only, API for business. But what are the data privacy implications of businesses connecting with customers?

Instant messaging platform WhatsApp has made a major foray into enterprise communication with the launch of an invitation-only API for businesses. Looking to monetize its extremely popular IM service, the company is offering large companies the opportunity to access and communicate with more than 1.5 billion users globally.

Using the platform, companies will be able to send customers information such as delivery updates, purchase receipts and boarding passes automatically. They can also use it as a customer service tool, quickly answering questions about products and services. Finally, consumers will have the option to start WhatsApp conversations with businesses through click-to-chat buttons on Facebook.

Currently, the service remains somewhat exclusive. According to VentureBeat, only 90 of the world’s largest companies have been asked to use the platform. They include the likes of Uber, KLM Airlines and Booking.com. But over time - and if everything goes to plan -  it’ll be opened up to more customers.

This is clearly a great way for businesses to promote their products and keep in touch with customers, although there are a number of burning questions that need to be asked. Firstly, will WhatsApp actually be able to transform the way companies communicate with consumers? And, given the level of access companies will have to personal data, what does this move for data privacy and security?

Troubled times

Raul Castanon-Martinez, an analyst at 451 Research, says Facebook is finally trying to make money out of the instant messaging service after buying it for $19 billion in 2014. Another motivating factor is that the social media giant has been hurt financially by ongoing privacy struggles. “First and foremost Facebook is looking to monetize WhatsApp; this has been the number one question since the multi-million acquisition took place a few years ago,” he tells IDG Connect.

“Secondly - but not less important - Facebook could be looking for ways to expand its revenue beyond the core Facebook platform. This makes sense given its recent struggles with new European privacy regulations, the backlash from the Cambridge Analytica incident and subsequent #DeleteFacebook movement, and disappointing Q2 results.”

The decision made by WhatsApp to branch out into enterprise messaging comes as tech giants such as Apple and Google have launched competing services. “The timing of the announcement is very interesting, not just because of what it means for Facebook but also given the emergence of competing business messaging platforms such as Apple Business Chat and Google- and GSMA-supported Rich Communication Services (RCS),” says Castanon-Martinez.

“These services are taking omnichannel customer engagement to a new level. Unlike Facebook Messenger for example, these services are not ad-driven, and unlike SMS, they can provide a richer user experience and deeper integration to backend business application.”

Security epidemic

Not only is WhatsApp entering an extremely competitive marketplace, but the firm also has to deal with increasing privacy challenges in the wake of the Cambridge Analytica scandal. However, it still remains the most popular messaging service globally, so there’s nothing to say it can’t succeed. That’s the view of Castanon-Martinez. 

“WhatsApp faces several challenges, including intense competition from mobile operators looking to RCS as the next-gen messaging platform, as well as Google and Apple who are also trying to get into the game. Even though it’s a separate platform with a stated commitment since its early days to privacy and maintaining an ad-free business model, the backlash from the Facebook/Cambridge Analytica incident could spill over to WhatsApp,” he says.

“Despite these hurdles, WhatsApp has a significant advantage as the most popular messaging platform worldwide. It is already inside consumers’ smartphones, in contrast to mobile operators which are still building traction with RCS; and it is device-agnostic which could be an important limitation for Apple Business Chat.”

What also sets the platform apart is that it’s already invested significantly in privacy and security defenses. Castanon-Martinez explains: “It is a different approach to other consumer-driven, customer engagement channels. They include end-to-end encryption, strict opt-in requirements and a number of rules that businesses need to adhere to for sending outbound messages. This will require businesses to host their own WhatsApp API client. This is not a simple task and suitable for larger organizations, but these are the type of clients that will be more inclined to have strict privacy and security requirements.”

Handling personal data

Mike Herrick, senior vice president of product and engineering at mobile engagement platform Urban Airship, says the API provides a number of benefits for organizations. “Brands communicating with customers on this platform are now gaining first-party data, enabling them to send personalized notifications. As such, they’re building stronger connections with their customers and gaining new insights into how they want to be contacted, alongside their preferred content. Businesses can utilize this data to provide a more personalized experience,” he says.

However, like Castanon-Martinez, he admits that there are significant concerns around data privacy. Although WhatsApp comes packaged with encryption, firms must still have their own security safeguards in place and adhere to data protection laws. “Brands should be mindful of how they handle this enriched data, especially as recent concerns around data sharing mean consumers want assurance of privacy and security. While the API ensures all communications are end-to-end encrypted, and customers give their consent before interacting with a brand, businesses still need to ensure they comply with the GDPR,” says Herrick.

“Before adopting the enterprise messaging service, brands should establish clear rules and processes when storing data, and that the platform they’re using to store the data is completely secure so it cannot be stolen or lost – this ensures compliance.

“Businesses should also provide customers with the option to opt-out of receiving messages. And if customers do choose to remove themselves from being contacted, they must implement a process that removes the customer’s data.”

A unique opportunity

Warren Levitan, CEO of omnichannel messaging platform Smooch, is more positive. He has no doubt that WhatsApp will be able to break into the business market. “It’s the chat app with the largest global reach, with 1.5 billion monthly users in more than 180 countries. More importantly, in the majority of markets outside the US, WhatsApp is frequently the only way people communicate digitally. In these markets, brands effectively have no choice but to be on WhatsApp. Beyond its enormous reach, enterprise brands are very attracted to WhatsApp’s privacy model with end-to-end encryption,” he says.

“Instead of the channel being funded by marketing (like Facebook) or the channel’s own commerce ecosystem (like Apple), WhatsApp’s model is to monetize their platform directly through pay for use, which most large enterprises prefer in today’s privacy-conscious market. This privacy model also opens up messaging to regulated industries such as healthcare and financial services. To recap, WhatsApp’s unique reach and data privacy model are significant differentiators in the business messaging market and this very likely sets it up for significant market penetration.”

Prelini Udayan-Chiechi, VP of EMEA marketing at customer service software firm Zendesk, says the integration will allow companies to develop closer relationships with their customers. “Zendesk has partnered with WhatsApp allowing businesses to now connect with their customers directly through the app,” says Udayan-Chiechi.

“By extending customer support capabilities to WhatsApp, businesses that use Zendesk now have the reach of WhatsApp’s 1.6 billion users to provide more proactive support and seamless integration from conversation to resolution of customer enquiries. For example, customers can opt-in to receive updates and notifications such as purchase receipts, shipping changes or flight times directly.

“Along with their customers, streamlined communication helps customer service teams too, by providing an integrated central view of every interaction—all in one place. 1mg, India’s leading consumer health platform, which uses Zendesk to provide omnichannel support, has seen success through early access WhatsApp integration. They have proven that with the integration, they can handle over 20 percent of their order status enquiries daily with WhatsApp and Zendesk, which is much faster than before.”

 

It’s no surprise that WhatsApp is branching out into the enterprise marketing scene, with interest from some of the world’s biggest organizations. Only time will tell if the platform takes off in the wider business world, but to succeed in the long-term, WhatsApp and its users will need to take data privacy seriously. That’s also key to avoiding another Cambridge Analytica.